Susan Montee, CPA
Report No. 2007-10
The following findings were included in our audit report on the Riverview Gardens School District.
The Riverview Gardens School District's financial condition has declined significantly in the past year and based on the amended fiscal year 2007 budget, is expected to further deteriorate. The operating funds balance at June 30, 2005 was $12.4 million and is projected to be only $1.6 million at June 30, 2007. School districts with an operating funds balance of less than three percent of the operating funds expenditures are considered "financially stressed" per state law. In addition, the district has been classified as "Provisionally Accredited" by the Missouri Department of Elementary and Secondary Education, as the district has not met enough standards and indicators to be accredited.
During the four year, six month period ended December 31, 2006, the superintendent was apparently overpaid by approximately $158,400. From December 2004 to August 2006, the superintendent received 12 unauthorized salary advances and received various other salary amounts totaling $2,000 that were not approved by the board. In addition, the district paid interest totaling approximately $39,000 on the superintendent's personal loans against his insurance policies during the three years ended June 30, 2006. Also, car allowances paid to the superintendent exceeded the amount authorized by his employment contracts by $6,300 during the three year, six month period ended December 31, 2006.
The superintendent carried forward more vacation days than allowed by his contract and was paid $27,551 for 45 vacation days in June 2005 and $26,122 for 40 vacation days in February 2006. The payments were approved by the board president, but were not submitted to the full board for approval.
The district over funded the superintendent's annuity by $15,000 for the year ended June 30, 2006. In addition, the district paid approximately $42,500 more for the superintendent's insurance premiums than required by the contract and untaxed contributions to the superintendent's tax sheltered annuities appear to exceed limits established by the IRS.
Original budgets approved by the board were not accurate and complete, reasons for budget amendments were not clearly documented, and the district’s final actual operating funds disbursements exceeded budgeted amounts by $5.7 million for the year ended June 30, 2006. The original budget for fiscal year 2007 underestimated disbursements and had to be amended for corrections in November 2006. Concerns regarding financial records and reporting include monthly financial reports being inaccurate, coding disbursements to whatever area had funds remaining in the budget, not posting checks on a timely basis, and in June 2006, knowingly issuing checks in excess of the accounts payable bank account balance.
There were numerous concerns regarding bidding and contracts. Several purchases were not competitively bid or competitive requests for proposals were not obtained, including: alternative education services, $2,020,188; custodial equipment and supplies, $410,743; classroom learning materials, $364,034; and educational software, $250,000 to name a few. Board minutes did not document the reasons for rejecting the lowest bid for a construction project, written contracts were not properly executed with some vendors and some contracts were not approved by the board. Additionally, requests for proposals were not adequately planned. On February 23, 2005, the board approved a $1.3 million contract for energy management services for three schools. Eleven days later, a change order for $736,000 was approved to add eight more buildings to the contract.
The district paid approximately $43,000 to a moving company owned by a board member's father and the district hired relatives of a board member and an administrator in violation of board policy. The district has not established adequate procedures for identifying related parties.
During the two years ended June 30, 2006, charges totaling approximately $240,000 were made on the district's credit cards. Receipts were missing for 42 of the 48 monthly credit card statements reviewed. Additionally, board members and the superintendent did not account for cash advances and did not return or account for unused funds. Also, some disbursements do not appear to be reasonable uses of public funds including: $7,000 for artwork and print framing for art in individual offices, $4,900 for lodging, meals, and refreshments for a two-day board retreat held in Hermann, Missouri and $1,180 for the superintendent's four subscriptions to a local theatre company. Finally, software training sessions totaling $41,625 were not supported by a written contract.
Payroll records and procedures are in need of improvement. The district has not developed a master staffing plan as part of the annual budget and does not have written job descriptions for some positions. Procedures for hiring employees, maintaining employment documentation and leave records, documenting and processing employee terminations, and monitoring and controlling overtime need improvement. Payroll calculations are not reviewed to ensure they are correct. As a result, there were several overpayments made to terminated employees. Salaried employees are paid in advance of the time worked and are not required to prepare time sheets. In addition, car allowances paid to the Director of Facilities and the Director of Safety and Security/Residency and Enrollment were not approved by the School Board.
Receipt and disbursement controls and procedures need improvement. The list of checks presented to the board each month is not complete and several checks are issued to vendors prior to or without board approval. Invoices are not adequately reviewed which resulted in several duplicate payments. Receipts are not deposited on a timely basis and receipt records prepared at various collection points are not reconciled to deposits. Some monies were withheld from deposits and used as petty cash and change funds and some petty cash funds are excessive and not properly maintained.
Also included in the report are recommendations related to capital improvements and property purchases, cellular phones, capital assets, board meeting minutes, and the need for internal audits.